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Common Financial Instruments

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Savings Account

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A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.

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Checking Account

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A deposit account that allows withdrawals and deposits, meant for frequent or daily use.

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Certificate of Deposit (CD)

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A savings certificate with a fixed maturity date and specified fixed interest rate that restricts access to funds until the maturity date.

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Money Market Account

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An interest-bearing account that typically pays a higher interest rate than a savings account, and provides the account holder with limited check-writing ability.

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Mortgage

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A loan secured by real property, typically used by individuals to purchase a home.

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Auto Loan

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A personal loan to purchase an automobile, where the car serves as collateral for the loan.

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Personal Loan

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A type of unsecured loan that is used for personal expenses and does not require collateral.

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Credit Card

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A card issued by a bank allowing the cardholder to purchase goods and services on credit.

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Merchant Services

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Financial services used by businesses to handle credit and debit card transactions with customers.

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Treasury Bills (T-Bills)

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Short-term government securities with maturities of one year or less and sold at a discount.

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Corporate Bonds

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Debt securities issued by companies to raise capital, with the promise to repay the face value on the maturity date, plus periodic interest payments.

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Municipal Bonds

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Debt securities issued by states, cities, or counties to finance capital projects like building schools, highways, or sewer systems, and are often exempt from federal taxes.

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Government Bonds

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Long-term securities issued by the government to finance national spending, known to be low-risk with a fixed interest rate.

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Stocks

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Equity securities that represent ownership in a corporation, entitling the shareholder to a proportion of the corporation's assets and profits.

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Mutual Funds

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An investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, and other assets.

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Exchange-Traded Funds (ETFs)

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Marketable securities that track an index, a commodity, bonds, or a basket of assets like an index fund, and are traded on stock exchanges.

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Derivatives

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Financial securities with a value that is reliant upon, or derived from, an underlying asset or group of assets—a benchmark.

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Real Estate Investment Trusts (REITs)

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Companies that own, operate, or finance income-generating real estate across a range of property sectors, required to distribute at least 90% of taxable income to shareholders in the form of dividends.

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